Auto Lending Discrimination Guidance Repeal Sets a Dangerous Precedent

Congressional Republicans are determined to set a dangerous precedent with their latest assault on regulations.

On April 18, the U.S. Senate voted 51-47 to repeal the U.S. Consumer Financial Protection Bureau’s 2013 auto lending guidance. The U.S. House of Representatives is expected to hold a vote the week of May 7.

The guidance is designed to combat racially discriminatory lending practices by stopping auto lenders from charging black, Latino and Asian customers with higher interest rates. While consumers have every right to be offended by repeal of this commonsense anti-discrimination measure, voters also should be alarmed by the way it is being repealed: through a clear misuse of the Congressional Review Act.

The CRA is a remnant of Newt Gingrich’s Contract With America that allows Congress – by majority vote in both chambers, with limited debate, no possibility of a filibuster and the president’s signature – to override recently issued public protections. This Congress has used the CRA to repeal 15 public protections including broadband privacy protections, the CFPB’s forced arbitration rule and several anti-pollution standards. Before 2017, it had only been used once.

The CRA has been around for 22 years, but it never before has been used to target nonbinding regulatory guidance or older, settled agency actions. By using the CRA to repeal the CFPB’s 2013 auto lending guidance, congressional Republicans are stretching the law far beyond its original intent.

First, the CRA is a heavy handed and extreme way to get rid of agency guidance. Unlike regulations, which must go through the lengthy and arduous process set up by the Administrative Procedure Act to be established, changed or removed, guidance documents can be issued, amended and withdrawn by federal agencies quickly and easily.

In practical terms, Mick Mulvaney, the CFPB’s contested interim director who has never held back when it comes to slashing regulatory protections, could get rid of the auto lending guidance just by snapping his fingers. If congressional Republicans are so determined to dispense with the guidance, why not simply ask Mulvaney to do it?

It makes no sense to go to the enormous trouble of getting Congress and the White House involved to accomplish something that the CFPB easily could do without them. Using the CRA to repeal guidance is a bit like calling up the National Guard to change a light bulb. Even if it’s theoretically permissible, it’s needless overkill, an abuse of power and a colossal waste of time and resources.

Second, the CRA never was intended to be used against older, settled agency actions. The conventional understanding of the CRA was that it could be used by Congress to strike down recently issued regulations, and there is little doubt that those who originally passed the law understood it in this way.

But now, Republicans in Congress claim they’ve found a technical loophole in the badly written law that would allow them to overturn regulatory protections that have been in place since as far back as 1996 if those rules weren’t formally submitted to Congress. That includes the CFPB’s 2013 indirect auto lending guidance.

Opponents of the guidance surely could have, and more appropriately should have, used the CRA to challenge it back in 2013 when it was issued, but they would have lost that challenge because they did not have the votes in Congress or a president willing to support such a challenge. Republicans are challenging the guidance now because they have the votes. It’s a deeply cynical political calculation.

Exactly how many rules and guidance documents are vulnerable because of this newfound loophole isn’t yet clear. What is clear is that congressional Republicans are trying to open up a new front in their war on regulations.

It’s telling that instead of addressing pressing national problems such as gun violence, student debt and protecting our elections from foreign influence, Republican politicians are using their congressional majorities to carve out loopholes and use procedural gimmicks to pay back their corporate donors with deregulatory handouts.

Evidently Republicans are more interested in helping their vulnerable incumbents raise campaign cash from the powerful and well-heeled auto lobby than in protecting consumers who are being charged more for car loans based on the color of their skin.

Voters should contact their members of Congress now and urge them to vote no on S.J. Res. 57/H.J. Res. 132 – both on the merits and because of how it abuses the CRA.


Amit Narang is the regulatory policy advocate for Public Citizen’s Congress Watch division.

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